Alison B. also submitted the following interesting links relating to the Gulf oil spill. Thanks!
1. From Colin Powell via the Huntington Post
2. From Tom Friedman via the NY Times
3. Video by Philippe Cousteau Jr. via RepowerAmerica.
Monday, May 31, 2010
The Beneath Contempt Award for May
And the winner is: submission by Alison B.:
From the Yahoo news article: WASHINGTON - Kentucky's Republican Senate candidate Rand Paul is criticizing President Barack Obama's handling of the gulf oil debacle as putting "his boot heel on the throat of BP."Paul says Obama's criticism of the oil company sounds like an attack on business and "really un-American."In an interview Friday on ABC's "Good Morning America," Paul says the president's response is part of the "blame game" that's played in the U.S. Paul said that leads to the thinking that tragic incidents are "always someone's fault" and added, sometimes accidents just happen.Paul began the interview on the defensive when GMA host George Stephanopoulos tried to clarify Paul's position on whether civil rights laws should apply to private businesses. Paul, who won the Kentucky GOP primary Tuesday, asked when his honeymoon with the media started.
Of course, the whole point of the BCA is that it requires no comment; yet, here's a good one from from S.B.:
I wonder if this philosophy extends to his [Rand Paul's] ophthalmology practice:Why play the "blame game" for this glaucoma? Regulating the pressure in your eye would be un-optical. Let the invisible hand take care of this!
What is it about these so-called "libertarian" lightweights. Are they unaware that issues of government and social compact have been discussed by creative and subtle minds for centuries before Ayn Rand's silly novels? Have they never read John Locke and others?
From the Yahoo news article: WASHINGTON - Kentucky's Republican Senate candidate Rand Paul is criticizing President Barack Obama's handling of the gulf oil debacle as putting "his boot heel on the throat of BP."Paul says Obama's criticism of the oil company sounds like an attack on business and "really un-American."In an interview Friday on ABC's "Good Morning America," Paul says the president's response is part of the "blame game" that's played in the U.S. Paul said that leads to the thinking that tragic incidents are "always someone's fault" and added, sometimes accidents just happen.Paul began the interview on the defensive when GMA host George Stephanopoulos tried to clarify Paul's position on whether civil rights laws should apply to private businesses. Paul, who won the Kentucky GOP primary Tuesday, asked when his honeymoon with the media started.
Of course, the whole point of the BCA is that it requires no comment; yet, here's a good one from from S.B.:
I wonder if this philosophy extends to his [Rand Paul's] ophthalmology practice:Why play the "blame game" for this glaucoma? Regulating the pressure in your eye would be un-optical. Let the invisible hand take care of this!
What is it about these so-called "libertarian" lightweights. Are they unaware that issues of government and social compact have been discussed by creative and subtle minds for centuries before Ayn Rand's silly novels? Have they never read John Locke and others?
Sunday, May 30, 2010
No good news. What Obama should do.
Although the vacation was enjoyable and needed, the news from the Gulf haunted me in the Maine countryside and things have gotten worse. In spite of my general cynicism about the competency of large corporations, I had somehow hoped that at least the engineers at BP had an effective plan up their sleeves to stop the horrible oil leak.
But no: The company has no real experience or practice in dealing with this kind of problem. They simply assumed that such an explosion and leak would either never happen, or that the containment apparatus would deal with it effectively. In fact, they had never tested the device at these depths, and had never practiced dealing with such an emergency. This did not prevent them from telling regulators that they were prepared for everything. The regulators, long-time enablers of corporate mal- and non-feasance, did nothing regulatory -- either under Bush or under Obama. Of course, it's not just Big Oil. No Big-anything gets regulated these days, from Big Banks to Big Pharma to Big Salt.
Just a few months ago the President was telling us how smart the execs from Goldman-Sachs were. Then he told us that we needed more drilling for oil. No mention of regulation from either him or Ken Salazar.
Obama is in a slightly ticklish situation. If he lets BP continue to have exclusive rights to dealing with the leak, then he gets criticized for kowtowing to the company nearly universally held responsible for the leak. On the other hand, if he takes over and "nationalizes" the site, then he owns the problem and has to come up with a solution. Still, this is the kind of situation in which a real leader has to make a decision and actually lead. As we've seen, sometimes Obama has to be given a kick in the pants to do this. It's an ugly situation but he's in it and he has to fish or cut bait.
The President should declare this a national emergency and summon experts , academic and industrial, from around the country -- hydraulic engineers, ocean scientists etc. -- to meet in Louisiana to brainstorm a solution. We need people with technical savvy -- and specifically, not executives -- to come up with a way to plug this leak without waiting for August when BP will drill a "side" well to relieve the pressure on this broken one and, of course, preserve their oil. BP should forfeit any rights to this oil and to the site itself.
Finally, Ken Salazar should resign and the President should replace him with someone more committed to strong regulation, and someone with absolutely no ties to Big Oil or Agribusiness.
But no: The company has no real experience or practice in dealing with this kind of problem. They simply assumed that such an explosion and leak would either never happen, or that the containment apparatus would deal with it effectively. In fact, they had never tested the device at these depths, and had never practiced dealing with such an emergency. This did not prevent them from telling regulators that they were prepared for everything. The regulators, long-time enablers of corporate mal- and non-feasance, did nothing regulatory -- either under Bush or under Obama. Of course, it's not just Big Oil. No Big-anything gets regulated these days, from Big Banks to Big Pharma to Big Salt.
Just a few months ago the President was telling us how smart the execs from Goldman-Sachs were. Then he told us that we needed more drilling for oil. No mention of regulation from either him or Ken Salazar.
Obama is in a slightly ticklish situation. If he lets BP continue to have exclusive rights to dealing with the leak, then he gets criticized for kowtowing to the company nearly universally held responsible for the leak. On the other hand, if he takes over and "nationalizes" the site, then he owns the problem and has to come up with a solution. Still, this is the kind of situation in which a real leader has to make a decision and actually lead. As we've seen, sometimes Obama has to be given a kick in the pants to do this. It's an ugly situation but he's in it and he has to fish or cut bait.
The President should declare this a national emergency and summon experts , academic and industrial, from around the country -- hydraulic engineers, ocean scientists etc. -- to meet in Louisiana to brainstorm a solution. We need people with technical savvy -- and specifically, not executives -- to come up with a way to plug this leak without waiting for August when BP will drill a "side" well to relieve the pressure on this broken one and, of course, preserve their oil. BP should forfeit any rights to this oil and to the site itself.
Finally, Ken Salazar should resign and the President should replace him with someone more committed to strong regulation, and someone with absolutely no ties to Big Oil or Agribusiness.
Tuesday, May 18, 2010
Israel and Chomsky
As I've mentioned several times, I decided a long time ago not to blog about events and parties in the Palestinian-Israeli dispute. However, the Israeli Interior Ministry's recent denial of entry to Noam Chomsky to speak at a university in the occupied West Bank is totally outrageous and certain really makes Israel look bad. It would have been bad enough if the military had claimed his presence would incite riots; but, this was the civilian Interior Ministry. A guard on the Allenby bridge told Chomsky that "Israel does not like what you say." (Chomsky supposedly replied: "Neither does any other country.")
Chomsky, BTW, has visited Israel dozens of times, with no riots recorded.
So much for the "only democracy in the Middle East."
I'll be gone for a brief vacation -- back in a week or so. Things probably won't require my immediate commentary ... (need smiley face here).
Chomsky, BTW, has visited Israel dozens of times, with no riots recorded.
So much for the "only democracy in the Middle East."
I'll be gone for a brief vacation -- back in a week or so. Things probably won't require my immediate commentary ... (need smiley face here).
Saturday, May 15, 2010
Mandatory Drug Testing II
A. President Obama still says that offshore oil drilling should be part of the mix of energy production.
B. Sen. Lindsey Graham (Rep, S.C.) was supposedly working with John Kerry (Dem, MA) on a "bipartisan" energy bill. When it seemed the Dems were going to push immigration reform ahead of energy reform, he backed out. Although the recent terrible oil spill makes energy reform more not less important, Graham and lots of others say that it is less likely that an energy bill will be passed since the Dems can't buy off the PTR with offers of offshore drilling any more.
C. BP Exec Jamar McKay blames contractor Transocean. Transocean exec Steven Newman blames contractor Halliburton. Halliburton exec Tim Probert blames ... Well, you get it: the list goes on -- see Jon Stewart's take HERE. The Federal Minerals Management Service has been issuing permits for drilling without demanding the required environmental protection checks. The EPA has been strangely silent as has Interior Sec. Salazar.
D. The TeaScreamers party parties on with their "smaller government" nonsense. Will Halliburton protect us?
E. Many scientists (none on the payrolls of BP, Transocean or Halliburton) think that the rate of the spill is greater than "official" estimates by a factor of perhaps several thousand. No one has any idea of the damage that a continuing spill of even the official rate might cause. Sarah Palin has no specifics and no comment on drilling (baby) drilling.
F. President Obama still says that offshore oil drilling should be part of the mix of energy production.
G. The Party for The Rich (formerly the GOP) is still beneath contempt.
Are there enough paper cups and urine-analysis kits for all of these people?
B. Sen. Lindsey Graham (Rep, S.C.) was supposedly working with John Kerry (Dem, MA) on a "bipartisan" energy bill. When it seemed the Dems were going to push immigration reform ahead of energy reform, he backed out. Although the recent terrible oil spill makes energy reform more not less important, Graham and lots of others say that it is less likely that an energy bill will be passed since the Dems can't buy off the PTR with offers of offshore drilling any more.
C. BP Exec Jamar McKay blames contractor Transocean. Transocean exec Steven Newman blames contractor Halliburton. Halliburton exec Tim Probert blames ... Well, you get it: the list goes on -- see Jon Stewart's take HERE. The Federal Minerals Management Service has been issuing permits for drilling without demanding the required environmental protection checks. The EPA has been strangely silent as has Interior Sec. Salazar.
D. The TeaScreamers party parties on with their "smaller government" nonsense. Will Halliburton protect us?
E. Many scientists (none on the payrolls of BP, Transocean or Halliburton) think that the rate of the spill is greater than "official" estimates by a factor of perhaps several thousand. No one has any idea of the damage that a continuing spill of even the official rate might cause. Sarah Palin has no specifics and no comment on drilling (baby) drilling.
F. President Obama still says that offshore oil drilling should be part of the mix of energy production.
G. The Party for The Rich (formerly the GOP) is still beneath contempt.
Are there enough paper cups and urine-analysis kits for all of these people?
Mandatory Drug Testing I
Yesterday, Minnesota Twins manager Ron Gardenhire, with 2 men on, had his pitcher Matt Guerrier walk Mark Texeira of the Yankees in order to pitch to Alex Rodriguez. A-Rod is, of course, one of the greatest hitters in baseball -- one of the best, in fact, of all time -- and was 4 for 6 (with 3 homers) against Guerrier. Also, A-Rod at the time was 3 for 3 when Texeira is walked ahead of him. Admittedly, 1st base was open, but A-Rod promptly launched his 19th career grand-slam off Guerrier. What part of statistics or baseball records didn't Gardenhire understand? Would you put money of Ruth, Gehrig or Aaron to hit into a double play under these circumstances?
Shouldn't managers be subject to immediate drug testing after decisions like this? If Lance wins the Tour this summer, I'm sure the authorities will do no less.
Shouldn't managers be subject to immediate drug testing after decisions like this? If Lance wins the Tour this summer, I'm sure the authorities will do no less.
Thursday, May 13, 2010
Level of discourse
The financial reform bill now before the Senate includes the creation of a consumer financial protection bureau. Naturally, the PTR (formerly the GOP) opposes this, since it objects to nearly anything that might go against the interests of its corporate masters. Even some Democrats demur. The result has been, among other things, a special amendment that would exempt auto-dealerships from restrictions on deceptive loan practices (e.g. inflated rates, hidden fees, and fine-print provisions committing car purchasers to buy expensive but unneeded add-ons).
When the administration stupidly protested that some of these deceptive practices victimized members of the military -- as if cheating soldiers is somehow worse than cheating, say, poor people or widows and orphans -- Scott Brown (R, MA) and Jack Reed (D, RI) added an amendment that would create a special office to counsel military families on predatory lending. This amendment passed 98 - 1.
A lot of the things that Senators (Reps also) do is not based on any particular logic but rather on superficial crowd-pleasing and cowardly posturing. If people are worth protecting against corporate deception, then people are worth protecting. Perhaps the military should provide some financial counselling -- maybe by cutting a hardware project or two. Meanwhile, is there some reason why one would want to allow any segment of the corporate world -- auto companies or banks or orthodontists -- to be allowed to deceive consumers? (Yes, the PTR is worried that the payment plans for braces might somehow be regulated, since who wants to protect someone with crooked teeth?)
The ethical reasoning is quite unclear. If something is deceitful and harmful, why shouldn't it be illegal, and why shouldn't the laws against it be enforced? Why should some group of people be entitled to protection and not others? Beats the hell out of me.
When the administration stupidly protested that some of these deceptive practices victimized members of the military -- as if cheating soldiers is somehow worse than cheating, say, poor people or widows and orphans -- Scott Brown (R, MA) and Jack Reed (D, RI) added an amendment that would create a special office to counsel military families on predatory lending. This amendment passed 98 - 1.
A lot of the things that Senators (Reps also) do is not based on any particular logic but rather on superficial crowd-pleasing and cowardly posturing. If people are worth protecting against corporate deception, then people are worth protecting. Perhaps the military should provide some financial counselling -- maybe by cutting a hardware project or two. Meanwhile, is there some reason why one would want to allow any segment of the corporate world -- auto companies or banks or orthodontists -- to be allowed to deceive consumers? (Yes, the PTR is worried that the payment plans for braces might somehow be regulated, since who wants to protect someone with crooked teeth?)
The ethical reasoning is quite unclear. If something is deceitful and harmful, why shouldn't it be illegal, and why shouldn't the laws against it be enforced? Why should some group of people be entitled to protection and not others? Beats the hell out of me.
Sunday, May 9, 2010
Investors?
Michael Durbin, in an op-ed in yesterday's Times, writes:
"Often, when an exchange operator receives an investor order and finds that another exchange has a better price, it will “flash” the order to a few select traders in its exchange a split second before sending it to market, giving those traders an opportunity to improve their price, too. When used properly, flashing ensures that investors trade at the best available prices."
Actually, we are not talking about "investors" here: the word Durbin wants is speculators. The stuff they teach in school about investors making profits because they take risks in helping finance a company, and the stuff they teach about the legitimacy of these profits (and their special tax status) is, in the immortal word of Richard Nixon: inoperative.
"Often, when an exchange operator receives an investor order and finds that another exchange has a better price, it will “flash” the order to a few select traders in its exchange a split second before sending it to market, giving those traders an opportunity to improve their price, too. When used properly, flashing ensures that investors trade at the best available prices."
Actually, we are not talking about "investors" here: the word Durbin wants is speculators. The stuff they teach in school about investors making profits because they take risks in helping finance a company, and the stuff they teach about the legitimacy of these profits (and their special tax status) is, in the immortal word of Richard Nixon: inoperative.
Saturday, May 8, 2010
Three cheers and no cheers
The Cheers department
Give credit where credit is due: the Phoenix Suns professional basketball team is wearing jerseys with the words "Los Suns" to protest Arizona's harsh new illegal immigration statute. Among other things, the law allows -- encourages -- the police to stop anyone who might appear to be an illegal alien and demand proof of citizenship. This is, of course, an obvious invitation to racial, linguistic or cultural profiling.
It is rare that a sports team -- amateur or professional -- takes a stand on a political issue. Usually the most we can expect is the appearance of patches or armbands to call attention to a death or a disease -- hardly a controversial position.
Like so many places where the changing demographics have the traditional white power structure getting nervous, Arizona is making shriller and shriller reactionary noises and moves. The Republicans and TeaScreamers themselves see their power base getting narrower and narrower, so have resorted to more and more hyperbolic rhetoric in the hopes of cementing power -- at least temporarily -- through fear. It is their last best hope. If this country can only outlast them for a few more years...
The No Cheers department
The Pentagon wants to "contain" pay increases -- especially for healthcare -- for its human components, while keeping military hardware procurement on the fast and lucrative (for their contractors) track.
The Boston Globe reports:
"In the midst of two long-running wars in Iraq and Afghanistan, defense officials are increasingly worried that the government’s [Congress's] generosity [in providing generous pay and healthcare benefits] is unsustainable and that it will leave them with less money to buy weapons and take care of equipment."
Given that we are fighting two wars of choice with the blood of many of these men and women, the concept of not giving them competitive pay (their pay currently is not competitive with private sector compensation according to the Globe article) and benefits is totally outrageous. Just compare what they get with what police and firefighters get in most cities. If we can't afford to take care of these people, then we can't afford to fight these wars.
Of course, I am referring to those military personel who are actually facing danger, not those who are warming deskchairs.
Give credit where credit is due: the Phoenix Suns professional basketball team is wearing jerseys with the words "Los Suns" to protest Arizona's harsh new illegal immigration statute. Among other things, the law allows -- encourages -- the police to stop anyone who might appear to be an illegal alien and demand proof of citizenship. This is, of course, an obvious invitation to racial, linguistic or cultural profiling.
It is rare that a sports team -- amateur or professional -- takes a stand on a political issue. Usually the most we can expect is the appearance of patches or armbands to call attention to a death or a disease -- hardly a controversial position.
Like so many places where the changing demographics have the traditional white power structure getting nervous, Arizona is making shriller and shriller reactionary noises and moves. The Republicans and TeaScreamers themselves see their power base getting narrower and narrower, so have resorted to more and more hyperbolic rhetoric in the hopes of cementing power -- at least temporarily -- through fear. It is their last best hope. If this country can only outlast them for a few more years...
The No Cheers department
The Pentagon wants to "contain" pay increases -- especially for healthcare -- for its human components, while keeping military hardware procurement on the fast and lucrative (for their contractors) track.
The Boston Globe reports:
"In the midst of two long-running wars in Iraq and Afghanistan, defense officials are increasingly worried that the government’s [Congress's] generosity [in providing generous pay and healthcare benefits] is unsustainable and that it will leave them with less money to buy weapons and take care of equipment."
Given that we are fighting two wars of choice with the blood of many of these men and women, the concept of not giving them competitive pay (their pay currently is not competitive with private sector compensation according to the Globe article) and benefits is totally outrageous. Just compare what they get with what police and firefighters get in most cities. If we can't afford to take care of these people, then we can't afford to fight these wars.
Of course, I am referring to those military personel who are actually facing danger, not those who are warming deskchairs.
Friday, May 7, 2010
Goldman Sachs II
Years ago I played in a weekly poker game with some friends. One of them, in addition to being a gifted mathematician, was a compulsive gambler. Not only would he remain in hands long after his chance of winning was virtually nil, but when he finally did fold, he would try to make side bets with others who were also out of the pot as to who would win the hand, or even what cards that person might have. Thus, while he was not directly involved in the "action" -- betting and raising -- he had a stake in the eventual outcome of a hand. Speculators in so-called "derivatives" are a little like this. They can place bets on the behavior of securities without actually owning the securities. In fact, in a very rarified abstraction, they place bets not even on a group of particular securities, but on a "reference" portfolio, none of which either they or the organizer of the bets, have to own. In the case of Goldman Sachs ( = GS) and its Abacus fund, these rarified schemes involve bets on so-called synthetic CDOs (CDO = Collateralized Debt Obligation). Here is my understanding of how this worked. (If you have corrections to what I'm about to say, please use the "Comments" option on this blog to set me straight.)
1. GS or a third-party selected by GS assembles a "portfolio" of bonds or other securities. These may be bundled mortgages, or more standard type bonds. In the case of the latter, the bonds come in "tranches", which specify the (chronological) order in which they are paid off, or in which they become losses. But even if the securities are not actual bonds, GS can simulate these tranches when it assembles this theoretical portfolio.
2. The portfolio is given a overall "rating" depending on the ratings of the individual bonds comprising it. The best bond ratings are AAA, the lowest BBB. A mixed portfolio is rated using a formula depending on the percentages of its bonds having various ratings. I don't know this formula.
This point is where the SEC has charged GS with unethical manipulation of the portfolios and their value. Basically, they never told the people who would eventually "bet" on the portfolio that is was put together by a GS employee who designed them to fail. More below.
3. GS now set up the poker game called a synthetic CDO (synthetic because the portfolio is not actually owned but is "representative") by arranging Credit Default Swaps (CDS's). They brought together two parties: one who thought the portfolio would prosper -- the "long" position -- and one who thought the opposite -- i.e. the "short position" that it would fail. The longs would sell CDS contracts to the shorts. These CDS contracts would pay the purchaser a certain amount of "insurance" if the sample portfolio declined in value; in return, the shorts would pay the longs a certain "premium" for this protection. Of course, these CDS transactions are not really insurance policies, since they are not subject to any of the regulations and protections that go with the insurance industry. In any case, if the portfolio prospers, the longs make money from the "premiums" the shorts pay for the CDS contracts. Inversely, if the portfolio tanks, the shorts are paid compensation by the contracts with the longs -- typically much more than what they have paid for the CDS contracts.
The determination of whether the portfolio declines in value or not -- in other words, whether the CDS's benefit the shorts or not -- is determined not by the actual value of the bonds in the portfolio (their "face" value or what they are obligated to pay) but by the value assigned to them by the market at a certain time. This is called "mark to market" accounting", and has become pretty much standard since the days of Enron's ascendancy.
Here is where GS's creation of the sample portfolio for the Abacus Fund seems to be fraudulent. The sellers of the CDS were told, supposedly, that the sample portfolio was chosen by someone or some group that had no interest in the fortunes of the portfolio. In other words, that the portfolio was simply representative of bonds with a certain (weighted) average rating. In fact, the SEC determined that the portfolio was chosen by John A. Paulson, a prominent hedge fund manager known for his bearish views on the mortgage market. Apparently Paulson was not involved in actual transactions with the Abacus Fund; however, Fabrice Tourre , a VP at Goldman Sachs, set up Abacus, had Paulson choose the portfolio in secret, hawked it to GS clients, then took a short position -- i.e. purchased CDS's from these clients -- on behalf of GS. Thus, knowing the portfolio was rigged to fail, Tourre got some of GS's own clients to sell "insurance" on it while buying this insurance himself for his company. GS's clients -- which included all sorts of investors and retirement funds -- lost heaps, while GS itself made a billion dollars or more on Tourre's machinations. Or so claims the SEC -- which I'm inclined to believe, as are most experts outside of GS (see, for example, this opinion).
1. GS or a third-party selected by GS assembles a "portfolio" of bonds or other securities. These may be bundled mortgages, or more standard type bonds. In the case of the latter, the bonds come in "tranches", which specify the (chronological) order in which they are paid off, or in which they become losses. But even if the securities are not actual bonds, GS can simulate these tranches when it assembles this theoretical portfolio.
2. The portfolio is given a overall "rating" depending on the ratings of the individual bonds comprising it. The best bond ratings are AAA, the lowest BBB. A mixed portfolio is rated using a formula depending on the percentages of its bonds having various ratings. I don't know this formula.
This point is where the SEC has charged GS with unethical manipulation of the portfolios and their value. Basically, they never told the people who would eventually "bet" on the portfolio that is was put together by a GS employee who designed them to fail. More below.
3. GS now set up the poker game called a synthetic CDO (synthetic because the portfolio is not actually owned but is "representative") by arranging Credit Default Swaps (CDS's). They brought together two parties: one who thought the portfolio would prosper -- the "long" position -- and one who thought the opposite -- i.e. the "short position" that it would fail. The longs would sell CDS contracts to the shorts. These CDS contracts would pay the purchaser a certain amount of "insurance" if the sample portfolio declined in value; in return, the shorts would pay the longs a certain "premium" for this protection. Of course, these CDS transactions are not really insurance policies, since they are not subject to any of the regulations and protections that go with the insurance industry. In any case, if the portfolio prospers, the longs make money from the "premiums" the shorts pay for the CDS contracts. Inversely, if the portfolio tanks, the shorts are paid compensation by the contracts with the longs -- typically much more than what they have paid for the CDS contracts.
The determination of whether the portfolio declines in value or not -- in other words, whether the CDS's benefit the shorts or not -- is determined not by the actual value of the bonds in the portfolio (their "face" value or what they are obligated to pay) but by the value assigned to them by the market at a certain time. This is called "mark to market" accounting", and has become pretty much standard since the days of Enron's ascendancy.
Here is where GS's creation of the sample portfolio for the Abacus Fund seems to be fraudulent. The sellers of the CDS were told, supposedly, that the sample portfolio was chosen by someone or some group that had no interest in the fortunes of the portfolio. In other words, that the portfolio was simply representative of bonds with a certain (weighted) average rating. In fact, the SEC determined that the portfolio was chosen by John A. Paulson, a prominent hedge fund manager known for his bearish views on the mortgage market. Apparently Paulson was not involved in actual transactions with the Abacus Fund; however, Fabrice Tourre , a VP at Goldman Sachs, set up Abacus, had Paulson choose the portfolio in secret, hawked it to GS clients, then took a short position -- i.e. purchased CDS's from these clients -- on behalf of GS. Thus, knowing the portfolio was rigged to fail, Tourre got some of GS's own clients to sell "insurance" on it while buying this insurance himself for his company. GS's clients -- which included all sorts of investors and retirement funds -- lost heaps, while GS itself made a billion dollars or more on Tourre's machinations. Or so claims the SEC -- which I'm inclined to believe, as are most experts outside of GS (see, for example, this opinion).
Wednesday, May 5, 2010
Emirates Airlines: Duh
At a time when anyone who is remotely conscious knew that a person who tried to create a car-bomb explosion in Times Square was on the loose, Emirates Airlines decided in its wisdom not to monitor the latest "No Fly" list. It allowed prime suspect Faisal Shahzad to buy a ticket for Pakistan (via Dubai) and actually board one of its flights, though his name was on the updated list. Only FBI monitoring of passenger lists prevented Shahzad from getting away; he was taken from the plane while it was still at the gate.
Shouldn't Emirates' rights as a carrier at least be suspended -- if not indefinitely, at least for some significant length of time? Failure to monitor this list puts all air travelers at risk.
Shouldn't Emirates' rights as a carrier at least be suspended -- if not indefinitely, at least for some significant length of time? Failure to monitor this list puts all air travelers at risk.
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